Bethlehem Steel Export Corp. v. Redondo Const. Corp.

• Citation: 140 F.3d 319
• Decision Date: 01 December 1997
• Docket Number: No. 97-1738,97-1738
• Parties: BETHLEHEM STEEL EXPORT CORPORATION, Plaintiff, Appellant, v. REDONDO CONSTRUCTION CORP., et al., Defendants, Appellees. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 319

140 F.3d 319

BETHLEHEM STEEL EXPORT CORPORATION, Plaintiff, Appellant, v. REDONDO CONSTRUCTION CORP., et al., Defendants, Appellees.

No. 97-1738.

United States Court of Appeals, First Circuit.

Heard Dec. 1, 1997.

Decided April 3, 1998.

Juan A. Ramos-Daz, San Juan, PR, for appellant.

Javier A. Morales-Ramos, San Juan, PR, for appellee American International Insurance Company of Puerto Rico.

Stuart A. Weinstein-Bacal, with whom David C. Indiano and Indiano, Williams & Weinstein-Bacal, San Juan, PR, were on brief, for appellee Redondo Construction Corp.

Before TORRUELLA, Chief Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

TORRUELLA, Chief Judge.

Plaintiff Bethlehem Steel Export Corporation ("Bethlehem") seeks to recover on a construction payment bond executed by defendants Redondo Construction Corporation ("Redondo") and its surety, American International Insurance Company of Puerto Rico ("American International"), pursuant to Law 388, P.R. Laws Ann. tit. 22, § 47 et seq., which requires every public works contractor to post a bond to secure the payment of materials used by the general contractor and subcontractors.

Redondo, the principal contractor for the construction of a portion of the Expreso de Diego, P.R. Highway 22, between Barceloneta and Manat ("Expreso de Diego"), Puerto Rico, paid Transcontinental Steel Company ("Transco") in full for steel Transco had acquired from Bethlehem. On defendants' renewed motion for summary judgment, the district court found that Transco was not a subcontractor, but rather a mere material supplier to Redondo during the construction of the Expreso de Diego. Accordingly, the district court determined that Bethlehem was not entitled to protection under Law 388 for certain materials supplied to Transco. We affirm.

I. BACKGROUND

In October 1990, Redondo entered into a written contract with the Puerto Rico Highway Authority for the construction of the Expreso de Diego. Redondo and its bonding company, American International, executed and delivered to the Highway Authority a construction payment bond pursuant to Law 388, which was modeled after the Miller Act, 40 U.S.C. § 270, et seq. Thereafter, Transco supplied Redondo with the structural steel required for the construction project. Redondo paid Transco in full for the steel. Transco had originally acquired the fabricated steel from Bethlehem, but it went bankrupt and failed to pay Bethlehem for the steel. Bethlehem seeks payment for the steel under the bond executed by Redondo and American International in accordance with Law 388. The primary issue on appeal is whether Transco was a subcontractor of Redondo, thus entitling Bethlehem to the protection of Law 388, or simply a material supplier to Redondo, which would leave Bethlehem without recourse to the bond.

Prior to filing the renewed motion for summary judgment before us, defendants had sought summary judgment on two different occasions, but both times Judge Juan M. Perez-Gimenez had denied the motions. The case was reassigned to Judge Daniel R. Domnguez and, after further discovery, the district court referred defendants' renewed motion for summary judgment to a magistrate judge. The magistrate judge recommended granting summary judgment in favor of defendants. The district court reached the same conclusion as the magistrate judge, although on different grounds. The district court determined that Transco was merely a material supplier, and hence Bethlehem was not entitled to protection under Law 388. Bethlehem appeals.

II. DISCUSSION

We review de novo a district court's grant of summary judgment. See Pine Tree Med. Assoc. v. Secretary of HHS, 127 F.3d 118, 120 (1st Cir.1997).

A. Definition of "Subcontractor" Under Law 388

As a threshold matter, we agree with the district court that, although Law 388 was modeled after the federal Miller Act, it differs from the federal statute in one crucial respect: Puerto Rico's legislation, unlike the Miller Act, expressly defines the term "subcontractor." According to the official English translation of Law 388, " 'subcontractor'--includes any person or persons who, as independent contractors, do any part of the work awarded to the contractor." P.R. Laws Ann. tit. 22, § 58 (official translation). The original Spanish version reads, " '[s]ubcontratista'--incluye a cualquier persona o personas que, como contratista independiente, ejecute cualquier parte de la obra adjudicada al contratista." P.R. Law Ann. tit. 22, § 58.

Bethlehem argues that the district court erroneously relied on the official translation of "ejecute cualquier parte de la obra," and read the phrase as "do any part of the work." According to Bethlehem, such a reading does not comport with the meaning of "execute," the literal translation of "ejecute," and of "work" as defined in Black's Law Dictionary (6th ed.1990). Bethlehem contends that, if the district court had adopted this intended meaning of the phrase, it would have found that Transco did fall within Law 388's definition of subcontractor. We reject...